Sims on hunt after record $32m half

Armed with a new corporate logo and a bumper half-year result, Sims Group chief executive Jeremy Sutcliffe said the "acquisition hungry" scrap merchant was heading for a record full-year net profit.

Sims reported a record half-year net profit of $32.5 million, up 54 per cent on the previous corresponding period, thanks primarily to the recent surge in worldwide scrap metal prices, which Mr Sutcliffe described as "little short of dramatic".

Pointing to the recent drying up of scrap being exported from the Black Sea region and Japan, an unusually cheerful Mr Sutcliffe said Sims expected to beat the half-year result by up to 25 per cent, which would represent a full-year net profit of more than $70 million.

This compares to the 2001-02 net profit of $48.5 million.

"There's no overhang in the market whatsoever. We remain very, very confident indeed," Mr Sutcliffe said.");document.write("

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Yet Mr Sutcliffe said the expected result would only be achieved if the Australian dollar did not rise any further and if scrap metal prices remained stable.

He said Sims's adverse foreign exchange hedge book - which values the dollar at US64c - was costing the group up to $15 million in lost profits (before interest and tax) a year. Sims expects to reduce the hedge book to $US17.5 million by July.

Sims shares yesterday closed 11c weaker at $8.90, however, in the past three months they have gained around 20 per cent.

Mr Sutcliffe said the oversupply of scrap from Eastern Europe that severely weakened ferrous prices - and Sims's profits - from the mid-1990s showed no signs of returning.

"I think now that those flows will never return to the levels they were in the past five years," he said.